Bottoms Up – or Bottomed Out?

01/15/2012
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The beer market comes to a head – it’s hardly a bubble economy

TOKYO (majirox news) — Japan’s beer market is dominated by four major breweries, but customers’ appetite for the brew appears to be on the wane. Although the final figures have yet to come in, it seems the Japanese market for the beverage shrank by 4 percent last year – and that’s the seventh year in a row that Japanese drinkers have quaffed less than the previous year. The prospects for this year are similarly dry – a forecasted contraction of between 1 and 3 percent.

For Suntory Liquors, Ltd., whose primary revenue derives from whiskey, this may not be so much of a blow, but for the other three of the Big Four: Asahi Breweries, Ltd., Kirin Brewery Co. and Sapporo Breweries Ltd., all of whom rely on beer for over 80 percent of their sales, this forces something of a rethink in the marketing plans.

There is light at the end of the tunnel (or maybe at the bottom of the glass), though. There are growth segments in the drink market – non-alcoholic beer, and pre-mixed canned low-alcohol cocktails (chu-hai) based around traditional Korean shochu liquor (similar to vodka) among them. The non-alcoholic beer market share has doubled over the past couple of years, even though it still represents only a few percent of the total market. Margins are high in this area (since liquor tax is not levied on these drinks), leading 2011 market leader Asahi to introduce its Dry Zero next month. The goal is to leap from between 2 and 3 percent market share to a full quarter (25 percent).

However, Asahi faces stiff competition. Last year’s leader Suntory, tripled sales of its product, All Free, in one year, and intends to sell seven million cases (an increase of 19 percent in sales). Marketing strategies will include handing out up to one million samples of the brew. Kirin hopes to boost sales in this line by 25 percent, and Sapporo by a whopping 77 percent.

Canned low-alcohol beverages (chu-hai) also enjoy a growing customer base, chiefly among female and younger customers, and similar drinks are also finding a market, such as a carbonated white wine drink to be introduced by Kirin in partnership with Mercian (the Kirin group’s wine brand). Suntory also will work to expand the range of shochu-based drinks, and Sapporo will leverage their partnership with world-famous rum distiller Barcardi, as part of the their expansion into pre-mixed liquor-based canned beverages.

Japanese customers can expect to see a wider variety of tipples on the supermarket shelves in the near future, and drivers who enjoy the taste of beer, but want to stay within the law (Japanese law is strict with regard to drinking and driving) will also find their choices expanded.

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2 Responses to Bottoms Up – or Bottomed Out?

  1. anothergaijin on 01/17/2012 at 9:42 am

    How much of the 4% drop in 2011 was because of the 3.11 earthquake? I know that some of the factories that brew and can/bottle the beer were shut down for some period after the quake/tsunami.

  2. Hugh Ashton on 01/17/2012 at 10:55 am

    Some of the consumption drop was almost certainly due to the effects of March 11, not only because of the reduced production, but also the “voluntary restraint” that stopped people spending money on things that they enjoyed doing. There was definitely a sense of guilt going round, in that people should not be enjoying themselves when others were suffering.

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